Saudi, Sudan to produce minerals from Red Sea

Port Sudan, October 10, 2011

Saudi Arabia and Sudan plan to produce within three years gold, silver and copper in large quantities from the bottom of the Red Sea, trying to execute a project in planning for almost four decades, a senior Sudanese official said.

Both Arab countries, which lie across each other in the Red Sea, have been sounding out since the mid-seventies on how to exploit large mineral deposits suspected to be 2,000 metres below sea levels.

A German firm first analysed in the seventies the Atlantis II basin which is located roughly half way between the Saudi port city of Jeddah and Port Sudan, the biggest port on the African country.

Using that data, both countries -- which agreed long ago to jointly explore the potential of the Red Sea -- now plan to start production in 2014 using special drill ships, said Abbas Al-Sheikh, undersecretary in the Sudanese mining ministry.

Sudan will explore the basin with Saudi firm Manafa International which has formed a joint-venture with Canadian firm Diamond Fields International for the task.

"It's a lot," Sheikh told Reuters on Sunday on the sidelines of an industry conference in Port Sudan when asked how much both countries planned to produce from there.

Complicated and costly

Based on past estimates the basin stretching some 60 square kilometres contains 47 tonnes of gold, 3,750 tonnes of silver, 1.89 million tonnes of Zinc plus around 425,000 tonnes of copper, a Sudanese ministry study says.

The rock in the basin "indicates that sediments in some parts of the Atlantis basin may attain a total thickness of up to 160 metres," Diamond Fields says on its website.

Sheikh declined to say how much the project would cost, saying only it had now become viable after gold and copper prices haven risen strongly: "It is very costly...but now gold and copper prices are high. It's expensive."

Diamond Fields said more than $70 million had been spent to date by Saudi Arabia alone on research.

Industry experts said extracting the minerals from the sea bottom would be difficult and expensive, putting a question mark over the production date. Processing the minerals at a plant would cost $200 million or more.

"There are significant technological challenges," said Tucker Barrie, a Canadian mining consultant attending the conference.

The operation would need around 200 workers on rotation on sea plus 300-500 people working on land at a metallurgy plant.

Barrie said copper would be the most interesting mineral to extract from the deep-water basin: "Copper is the most value resource....From the size it is all copper."

Neither Saudi Arabia nor Sudan had a copper smelter to process the minerals, Barrie said. Building one would cost around $2 billion which would make sense instead of taking the copper somewhere else for processing.

Sheikh said both governments had not yet decided where to process the extracted minerals.

Sudan is expanding its minerals and gold production to compensate for the loss of most oil reserves to newly-independent South Sudan. – Reuters